Something we haven’t heard lately
Nearly ten years ago, I needed to call one of our largest clients at the time to let him know that his portfolio had gained 5% for the year, while the S&P 500 was up nearly 12%. The title above was his reasonable response. Something needed to change.
Today the typical Dock Street client owns fewer than 25 stocks in the equity side of the portfolio. Looking back to that “not very good” time, we owned the following:
- Out of the top five equity holdings, four were mutual funds. Each of those held dozens of individual stock positions.
- In total we owned 44 equity positions. Adding in all the stocks owned by those mutual funds and we could have easily owned hundreds of individual stocks.
Legendary investor, Peter Lynch, coined the term “diworsification” back in the 1990s—a pretty good description of the typical Dock Street portfolio in that period.
Something had to change at Dock Street or our clients would have changed it for us…by leaving.
Fortunately, Evan McGoff, our Chief Investment Officer, had started his work that focused our attention on the most financially powerful businesses, regardless of price. If they were “expensive” we wouldn’t disqualify the business from our work.
Looking at that long list of stocks back then it is clear that the transition to the current Dock Street portfolio was just beginning. At the bottom of the list were small positions in some familiar names, Google, Nvidia, Amazon, etc. In about 12 months the mutual funds were gone, these tiny positions became larger and the period of much better performance for Dock Street clients began.
By the way, that unhappy, large client is still with us and all our phone calls since then have been a lot more fun.
Best regards,
Daniel A. Ogden
Disclosure: Dock Street Asset Management, Inc. and/or our clients may own Google (GOOG), Nvidia (NVDA), and Amazon (AMZN). This article is not intended to be used as investment advice.
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